Consolidation is underway in the uranium market, with Urano Energy (CSE: UE) announcing this morning a binding letter agreement for the acquisition of Pegasus Resources (TSXV: PEGA) under an all-stock arrangement.
The strategic rationale for the combination is centered on Urano’s I-70 Uranium project in Emery County, Utah. That project will see the additional of Pegasus’ Energy Sands and Jupiter properties, which are contiguous to Urano’s current claims. The addition is expected to add 3,900 acres of unpatented mining claims to the project area.
Historical drilling conducted at Jupiter returned numerous intercepts with 1.0% U3O8 over a minimum of 2.5 feet just 20 feet within surface, while a sampling program conducted last year across Jupiter and Energy Sands saw 13 of 41 samples return values in excess of 1.0% U3O8, and 12 samples return values from 0.56% to over 5.0% V2O5.
Under the terms of the arrangement, Pegasus shareholders are set to receive 0.7 units of Urano for each common share of Pegasus held. Each unit is set to contain one common share and one half of a common share purchase warrant, with warrants containing an exercise price of $0.15 per share and an expiry of 18 months. Pegasus shareholders are expected to hold 13.25% of the resulting company.
Pegasus is also permitted to elect one director to the board of Urano post closing, which is currently expected to be CEO Christian Timmins. All other members of the current board and management of Pegasus are expected to resign upon closing.
The transaction remains subject to the signing of a definitive agreement, along with shareholders and customary regulatory approvals. A timeline for closing was not provided.
Urano Energy last traded at $0.085 on the CSE.
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